Holiday greetings from the Federal Reserve

That is to say, if by “holiday greetings” you mean some rancid turkey and a serious case of heartburn:

Unemployment is set to remain higher for longer than previously thought, according to new projections from the Federal Reserve that would mean more than 10 million Americans remain jobless through the 2012 elections – even as a separate report shows corporate profits reaching their highest levels ever.

Top Federal Reserve officials project that the unemployment rate, now 9.6 percent, will fall only to about 9 percent at the end of 2011 and about 8 percent when the next presidential election arrives, in late 2012. The central bankers had envisioned a more rapid decline in joblessness in their previous forecasts, prepared in June.

The sober economic forecast comes despite signs that the recovery is picking up slightly. The Commerce Department said Tuesday that gross domestic product rose at a 2.5 percent annual rate in the three months ending in September, not 2 percent as earlier estimated. And there have been solid readings in recent weeks on job creation, manufacturing and retail.

But wait, there’s more:

It was these diminished expectations for growth that led Fed officials this month to announce plans to buy $600 billion in Treasury bonds in a bid to drive down long-term interest rates and pump up growth.

[...]

But most Fed officials expected the results of bond purchases “to help promote a somewhat stronger recovery in output and employment while also helping return inflation, over time, to levels consistent with the Committee’s mandate.” Some also thought the action would offer insurance against a further drop in inflation or against the “small probability” of persistent deflation.

But the [minutes of the last Federal Reserve meeting] also leaves little doubt that several Fed officials remain uneasy with the action. Some anticipated that they would have only a “limited” effect on the pace of recovery, arguing the action should only be taken if the odds of deflation “increased materially.”

And several “noted concern” that the action “could put unwanted downward pressure on the dollar’s value in foreign exchange markets” or “an undesirably large increase inflation.”

So not only are Fed officials implicitly acknowledging that nearly two years of Obamanomics are a complete failure, but that their fiscal policy, as encapsulated in Quantitative Easings I and II, are doing little, if  nothing to help it as well.

We’re in the best of hands, folks.

But you know who must really be feeling like an idiot this really hurts?  Jeff Sommer.

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